Kim Dotcom posts pre-MegaUpload shutdown chat with Universal where collaboration is on the agenda

So this is fun. Kim Dotcom has posted a recording of a phone call he had with some Universal Music execs a few years ago in which the major label men – major foes of the MegaUpload founder, remember – discuss the possibility of participating in a new venture he was experimenting with at the time called Megakey.

Dotcom claims that the conversation took place just two days before the US authorities – following complaints by the major record companies and movie studios – swooped and shut down the entire MegaUpload business. Dotcom, of course, is still fighting extradition from New Zealand to America, where he faces charges of money laundering, racketeering and copyright infringement in relation to his former business.

In the run up to the MegaUpload shutdown, Dotcom had a separate dispute ongoing with Universal over the good old ‘Mega Song’. Remember that? “MegaUpload, Mega, Mega, MegaUpload”. Ha, it’s stuck in your head again now. Or if it isn’t, click here. Then it will be. Universal had issued a takedown request to YouTube over that song, but it turned out that it didn’t have any right to do so, and Dotcom was suing them for misuse of the Digital Millennium Copyright Act as a result.

The ‘Mega Song’ was embarrassing for the US record industry, which was busy trying to talk down Dotcom’s business at the time, because it featured a stack of top name artists singing along about how great MegaUpload was. Though, it seems from Dotcom’s now published phone call, it wasn’t just artists schmoozing the Mega chief.

In the conversation, which presumably Dotcom wasn’t meant to record, let alone make public three and half years later, Universal execs are heard expressing an interest in Megakey, a potentially controversial bit of software that would replace ads on web pages with banners controlled by the Mega group. Web users allowing Megakey ads to appear would then be rewarded with free music, while artists and labels would be paid a cut of ad income. Users would also be profiled and data potentially shared.

Noting that such an initiative would be controversial, because it would somehow replace ads that web page owners had themselves placed, both Dotcom and the label men agree during the call that the whole thing would have to start off slowly, replacing just 10% of the ads a participating user sees with those sourced by Megakey.

Dotcom also suggests initially only replacing ads that had been serviced to a web page by Google because, you know, those guys are profiting big time from your content already without fairly sharing out the money they make with rights owners, so screw them. “I completely agree,” responds one Universal man.

There is then some chatter about what Universal’s lawyers would make of the major working with Dotcom, though the execs seem keen to collaborate and do what they can to keep their angry legal team out of the proceedings wherever possible. Dotcom also says he would try and dilute his legal attack on Universal over the ‘Mega Song’ in return, which does seem to time the conversation to just before the big MegaUpload shutdown.

So, that’s all fun. Quite why Dotcom has released this recording now isn’t really clear, given making it public outside the courtroom doesn’t really help his legal case at all, and indeed, could open him up to new allegations of breaching laws on confidentiality. Some reckon it was timed to coincide with the launch of Baboom, the direct-to-fan service he founded which – at one point – he suggested would make record companies redundant. So was the aim to make the biggest record company of them all seem even more devious and sinister?

Actually, Universal could argue that the recording shows that its people are not blind to innovative new business models even where legal issues exist with the innovators. Though by 2012, MegaUpload was almost certainly on the same list as LimeWire and Grooveshark, as services the top guard at the mega-major just wanted out of business. The Google dissing is perhaps a little embarrassing for Universal, though that the record industry has a love hate relationship with the web giant is no secret.

Either way, this conversation – and its publication – is yet another interesting twist in the very long-running Music Industry v Dotcom saga. And it will fit in perfectly when I get round to turning that saga into an opera.